First Metropolis Monument Financial institution [FCMB] sustained new strengths in operations within the second quarter regardless of the challenges of the Covid-19 financial lockdown. The financial institution stored all the expansion levers up from the closing ranges in 2019.
The addition of latest strengths and retention of some key capabilities of the previous yr constitutes the working benefit for the financial institution this yr. It’s sustaining the elevated income outlook seen within the first quarter, which is going on for the primary time since 2017.
Each curiosity and non-interest incomes are contributing to income enchancment however non-interest earnings preserve main the best way. Towards a drop of 11 % in 2019, non-interest revenue grew by 13 % year-on-year at half-year ended June 2020.
Curiosity revenue continues to be accelerating from four % on the finish of final yr to eight % at half-year although slowing down from 15 % progress within the first quarter. This stays the best progress price in curiosity revenue for the financial institution at any time since 2014.
The nice habits of curiosity bills seen within the first quarter improved to higher within the second quarter. From a moderated progress of four % within the first quarter, curiosity bills proceeded to a three % decline year-on-year at half-year. Accelerating curiosity revenue and a decline in curiosity bills enabled a rise of 17 % in web curiosity revenue from lower than 5 % enchancment on the finish of 2019.
This marks the primary cheap enchancment in income the financial institution is seeing since 2017. Final yr ended with solely a 2 % enhance in gross revenue to just a little over N181 billion. Income progress at half-year represents the best in 4 years.
The retained power in income is conserving the underside line on the upbeat at which the financial institution started the yr within the first quarter. Revenue enchancment stays fairly good at 29 % year-on-year for FCMB at half-year – nonetheless among the finest progress information within the banking sector. That is an accelerating progress from the 16 % revenue enchancment on the finish of 2019.
The flexibility to transform income into revenue improved each on a year-on-year foundation and from the 2019 closing mark. On the finish of half-year, the web revenue margin stretched out from 8.four % in the identical interval final yr and from 9.5 % on the finish of 2019 to 10 %. It is a step again nevertheless from 11 % within the first quarter however but stays the best web revenue margin for the financial institution since 2015.
The financial institution’s working power for the 2020 monetary yr is anchored on rising income and enhancing revenue margin. The power to develop revenue greater than two and a half instances as quick as income at half-year factors to an affordable value saving achieved by administration. This got here from a decline in curiosity bills and a moderated working value through the interval.
The loss within the first quarter of a key power of final yr – which is a drop in web mortgage impairment bills for the third straight yr, remained in place at half-year. Mortgage loss bills rose by near 41 % to N7.Eight billion on the finish of June 2020. The rise follows a rise of 13 % within the mortgage portfolio final yr and by one other 10 % over the primary half of the present monetary yr to N795 billion.
Half-year operations ended with gross earnings of barely over N98 billion for FCMB, an accelerated progress from 2.three % on the finish of 2019 to 9 % year-on-year. This marks the primary cheap enchancment in income since 2017.
An enchancment of Eight % in curiosity revenue to over N76 billion is among the new strengths for FCMB in 2020. This displays the enlargement of incomes belongings with loans and advances rising by N80 billion over the 2019 closing determine of N715 billion and investments rising by N60 billion to N300 billion over the identical interval. The second is a rebound in non-interest earnings that had been a drag for the financial institution final yr to N22 billion on the finish of half-year.
At barely N30.Eight billion, curiosity bills improved additional its disciplined habits – declining by three % in opposition to a rise of four % within the first quarter. The share of curiosity revenue dedicated to curiosity bills went down from 45 % to 40 % over the overview interval. The end result is a rise of 17 % in web curiosity revenue to over N45 billion at half-year.
FCMB closed the half-year operations in June 2020 with an after-tax revenue of N9.7 billion, a rise of 29 % year-on-year. The financial institution is sustaining the trail of rising revenue for the third consecutive yr because it misplaced 40 % of revenue in 2017.
Earnings per share amounted to 49 kobo on the finish of half-year operations, enhancing from 38 kobo per share in the identical interval final yr.
The flexibility to take care of an elevated efficiency in earnings by means of the financial lockdown within the second quarter is a bullish level for FCMB going ahead to the second half. The financial institution is anticipated to retain the important thing strengths of rising income, moderating curiosity bills, and enhancing revenue margin to remain the course of rebuilding revenue for the third straight yr in 2020.